Could the Blue States finally be coming around on States’ Rights? It’s not quite a stand in the schoolhouse door, fortunately, but four of the most Democratic states in the nation are asking the Supreme Court to turn back federal interference in their affairs. Not over civil rights, but taxes — restoring their residents’ ability to deduct from their federal tax bill the full taxes they pay at the state and local level.

In President Trump’s 2017 tax law, Congress capped that deduction at $10,000. So upset are the Blue States over this that they’re even invoking the Tenth Amendment, long favored by right wingers as a limit on the government. Mr. Trump’s tax bill upended “150 years of precedent by drastically curtailing the deduction’s scope,” lawyers for New York, New Jersey, Connecticut and Maryland are now arguing in court.

The “SALT deduction,” they argue, “is essential to prevent the federal tax power from interfering with the States’ sovereign authority,”which is “guaranteed by the Tenth Amendment and foundational principles of federalism.” Next thing you know, the Attorneys General in these four states will fetch up as members in the Federalist Society, the right-leaning group regarded as a bête noire among legal liberals.

We certainly welcome their newfound “respect for the States’ distinct and inviolable role in our federalist scheme,” as their lawsuit put it. It’s unclear, though, whether their argument will pass muster at the Supreme Court. The Tenth Amendment says the “powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

Yet power to “lay and collect Taxes” is an enumerated power granted to Congress in Article I, section 8 of the Constitution. So what makes the SALT cap an “unconstitutional assault on the States’ sovereign choices”? The Blue States note that earlier federal income taxes imposed in 1861 and 1894 both included a deduction for state and local taxes. In 1895, though, the Supreme Court ruled the income tax unconstitutional.

That was trumped — pardon the expression — by the 16th Amendment, permitting Congress to tax incomes. Which it did, reviving the income tax in 1913, again with a state and local tax deduction. Since then, the ability to deduct from federal taxes the levies paid to state and local authorities has been a “mainstay of the federal Tax Code,” the federal district court noted when it rejected the Blue State suit in 2019.

The Blue States say the states agreed to ratify the Sixteenth Amendment only on the “understanding” that the federal income tax power “would remain subject to federalism constraints.” They add that the “federal government was required to accommodate the sovereign tax power of the States when it imposed a federal income tax.” Yet the states failed to insert those caveats into the Sixteenth Amendment.

Capping the SALT deduction, the Blue States say, was the result of a “rushed and highly partisan process” in a Congress controlled by Republicans.* It was, they say, meant to punish them for the higher tax burdens they impose — “to coerce those States into changing their sovereign policy choices.” At the time, Speaker Ryan said the cap would lead residents of high-tax states to “see their true cost of government.”

New York has the highest SALT burden in the country with an effective tax rate of 14 percent, and Connecticut stands at number two with just under 13 percent. Maryland and New Jersey are the sixth- and seventh-highest ranking states, respectively. Tens of billions of dollars are at stake for the residents of these high-tax states — an estimated $121 billion from 2018 to 2025 for New Yorkers alone.

Yet the courts so far haven’t been sympathetic. Judges have found the Blue States hadn’t proved a constitutional violation. In rejecting the Blue States’ case, riders of the Second Circuit acknowledged the lament that the “deduction cap coerces them to abandon their preferred fiscal policies in favor of lower taxes and reduced spending.” Yet the court was “not persuaded that the cap unconstitutionally infringes on state sovereignty.”

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* This could well be the first time in history that a lawyer has suggested in federal court that a law is unconstitutional because the Congress that passed it was controlled by the Republicans.

Image: Drawing by Elliott Banfield, courtesy of the artist.